A group of pretty much every bank you can name just asked the Supreme Court to withold documents that detail emergency cash injections they received from the government at the end of ’08, Bloomberg reports.The consortium, named the Clearing House Association, filed the appeal today.
The CHA is hoping the court will overule an August judgement demanding the Fed turn over documents to Bloomberg News under the Freedom of Information Act (FOIA).
Bloomberg is demanding the release of 231 term reports that would expose who borrowed money via four emergency lending programs in April and May of 2008, and how much.
If the appeal is denied, it will be the first time since 1914 that emergency borrowers are named publicly.
And actually, BofA, Citi and JPMorgan, desperate to keep their documents locked up, referenced that fact in their argument as to why the documents should be suppressed, via Bloomberg:
The central bank has never disclosed the identities of borrowers since the creation in 1914 of its Discount Window lending program, which provides short-term funding to financial institutions, the Clearing House said in its petition.
“Disclosure of this information threatens to harm the borrowing banks by allowing the public to observe their borrowing patterns during the recent financial crisis and draw inferences — whether justified or not — about their current financial conditions,” the group said in its appeal.
The Fed, however, isn’t asking the Supreme Court to withold their documents, but since the decision has now been appealed, the lower court’s ruling is “on hold” until the high court returns a verdict.
Clever move by the Fed. Here’s why:
- By not joining the appeal it looks less like the wily banks, desperate to conceal information.
- At the same time, it gets to free-ride off the Clearing House appeal because for the moment the information is basically in a holding cell until at least next year (normal Supreme Court practices will likely lead to a decision by mid-2011, according to Bloomberg).
The Clearing House (which includes BofA, Bank of New York Mellon, Citigroup, Deutsche Bank AG, HSBC, JPMorgan, US Bancorp, Capital One, UBS and Wells Fargo) and the Fed have argued that information, if divulged, could not only trigger bank runs, but would also disclose critical trade secrets.